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Who is afraid of Emefiele as Governor of CBN?

By Omoh Gabriel on 23/12/2015

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Many Nigerians do not seem to understand the role of the CBN in an economy. Some believe that the CBN is an authority in itself and does not take instruction from government. Yes, it is true that the CBN enjoys some autonomy; that is as far as its management is concerned. The CBN is the banker to the Federal Government and its economic and financial adviser. It is in the final analysis responsible to the president.

There have been several uninformed comments as to why the CBN paid out so much to those who made official request to it to move money from their deposit or their budgetary allocation from the federal government in the last administration in particular. A little bit of history of the evolution of central banking may help put things in the right perspective. Economic history has it that what can be regarded as an early central bank was the Sveriges Riksbank, established in 1668, although it was short-lived

In England in the 1690s, public funds were said to be in short supply and were needed to finance UK’s conflict with France. The credit of William III’s government was so low in London that it was impossible for it to borrow the £1,200,000 needed at 8 per cent. In order to induce subscription to the loan, the subscribers were to be incorporated by the name of the Governor and Company of the Bank of England. The bank was given exclusive possession of the government’s balances, and was the only limited-liability corporation allowed to issue banknotes.

The lenders would give the government cash (bullion) and also issue notes against the government bonds, which can be lent again. The £1.2million was raised in 12 days; half of this was used to rebuild the Navy. The establishment of the Bank of England, the model on which most modern central banks have been based on, was devised by Charles Montagu, first Earl of Halifax, in 1694.

Central Banks therefore are creation of governments. The mandate of the Central Bank of Nigeria (CBN) is derived from the 1958 Act of Parliament, as amended in 1991, 1993, 1997, 1998, 1999 and 2007. The CBN Act of 2007 of the Federal Republic of Nigeria charges the Bank with the overall control and administration of the monetary and financial sector policies of the Federal Government.

The objects of the CBN are as follows: ensure monetary and price stability; issue legal tender currency in Nigeria; maintain external reserves to safeguard the international value of the legal tender currency; promote a sound financial system in Nigeria; and act as Banker and provide economic and financial advice to the Federal Government.

Like any other bank, Central Bank keeps deposit for government, its ministries, Departments and Agencies. Many Nigerians, some very faceless have accused the CBN of being used as an ATM during the immediate past administration of Goodluck Jonathan. The CBN cannot deny a legitimate government in power access to public funds. Many of these allegations are coming from those who did not understand how the financial system works.

Nigerians must learn to understand that the relationship between the CBN and the federal government is like that between a bank and a customer who holds either a savings or current account with the bank. Just like a customer who issued a cheque to withdraw money from his account, the CBN when a payment mandate is issued by government agencies, looks at such mandate to ensure that the signature tallies with that of the mandated signatory before money from such agency’s account is released and once the CBN banking operations department is satisfied with the identity of the agency, it also checks to see that there is enough money in the account before paying; not minding whether the person wants it in cash or by transfer.

In whatever forms the agencies wants it, the apex bank has no option than to pay. The CBN does not operate as federal government’s internal auditor, whose responsibility is to check that the payment invoices and mandates being presented for payment are in accordance with corporate governance. Nigerians must also be aware that the CBN as a bank is neither a policeman nor an anti-graft agency to begin to question genuine request from constituted authority.

The question to ask those calling for the removal of the current CBN head is if today the current government issues a cheque on CBN, will the governor ask the sitting President to state what he wants the money for and how he intends to spend it? If the serving security adviser to the President issues a cheque for money to be taken from security vote domiciled in the CBN, are Nigerians saying that the CBN Governor should say no, you cannot take such funds? So long as the withdrawals have the mandate of the President, the CBN is covered.

The issue is that there are political undertones and hidden agenda in the call for the head of the Central Bank of Nigeria. In the first instance because the current CBN governor has made it clear that he is apolitical, many party stalwarts see him as a threat to their nefarious intentions. It was quite unfortunate that two weeks ago, the Minister of Information and Culture, Alhaji Lai Mohammed said that the Central Bank was turned to the ATM or piggy bank of a few people.

The CBN is being unduly vilified because most people do not understand the relationship it has with governments and its agencies that operate an account with it. Truth be told, the CBN does not honour mandates from government or its agencies with its own resources; it does so from these agencies’ funds it is holding for them in their own accounts. There is a lot of ignorance out there. The money the CBN paid out in Dasuki’s case is not CBN’s money.”

Are Nigerians aware of the details of the disbursement of the so- called Abacha loot? The fund was lodged in an account that belongs to the government of the federation. Are Nigerians aware that even the President of the country is not a signatory to the account? Are they aware that the only signatory to that account is the Accountant-General of the Federation and in all of these; nobody seems to notice that the office exists?

Is it not now an open secret that the then Finance Minister, Dr. Ngozi Okonjo-Iweala wrote a memo asking the President to approve that the money be moved from the Federal Government account to the account of the Office of the National Security Adviser?. The CBN is at the moment being attacked by foreign investors and their media because the bank denied foreign exchange access to 41 items that can be produced locally that is now affecting their economy.

It is also facing political pressure from hawks who want to see their candidate replace the current governor. What Nigerians must know is that the economy is in very bad shape and requires all hands on deck to fix it. It was political intrigue that resulted in the removal of Mallam Sanusi Lamido Sanusi from office toward the tail end of his tenure.

That was about a year ago. His removal unnerved the Nigeria economy. Then the nation was still in good financial position. Removing another CBN governor now on no serious charges will make Nigeria look like a banana republic where anything goes in the eyes of foreign investors and the international community.